June is right around the corner, and that means businesses need to file their IRS 941 tax forms. 941 tax forms are quarterly requirements, and missing out on filing can result in fines, garnished receivables, and worse. If you want to receive the best cash flow from an invoice factoring company, you need to understand why IRS 941 payments are crucial to the success of your business.
What Is Required in Form 941?
When filling out IRS Form 941, businesses need to declare the wages they have paid to employees. If you are in the service industry, this also means filling tips your employees have reported. Additionally, businesses need to report the standard federal income tax withheld, as well as Social Security and Medicare taxes. Note that there is a special section if the business owner is self-employed, as taxes need to be paid on revenue or salary drawn.
Penalties for Not Filing Form 941
If businesses are delinquent in filing Form 941, the IRS may issue a warning, or penalties for late filings. If the issue is ongoing, the IRS may leverage receivables until the full amount (plus penalties) is paid. In extreme cases, the IRS has been known to force businesses into bankruptcy, so it is essential for long-term success that businesses file their Form 941 taxes every quarter, before the due date.
Invoice Factoring and Form 941 Taxes
Most businesses that issue invoices with scheduled payments of 30, 60, or 90 days use invoice factoring. Invoice factoring companies have the ability to turn unpaid receivables into cash quickly so businesses can optimize their cash flow. However, if quarterly 941 taxes are not filed, the IRS will leverage receivables to get their payments, making it impossible for businesses to take advantage of invoice factoring.
Solutions for Quarterly Taxes
If you want to accelerate your cash flow, cover overhead, and position your business for growth, then you need to stay on top of your quarterly tax filings. The best way to avoid any repercussions is to work with a PEO. A PEO will take care of overhead, and make sure your business is in compliance with your quarterly taxes. This allows invoice factoring companies, like New Century Financial, to keep turning your receivables into cash and make funds available within 24 hours. To learn more about our comprehensive invoice factoring services, reach out to the team at New Century Financial today.